Cooperative Growth Ecosystem

BUILDING the Report 1 Report 2 Report 3 INCLUSIVE Broad-Based Cooperative Growth Strategies for Financing ECONOMY Ownership Models Ecosystems the New Economy THE COOPERATIVE GROWTH ECOSYSTEM Inclusive Economic Development in Action A joint project of Project Equity and the Democracy at Work Institute Melissa Hoover & Hilary Abell, Lead Authors project Building the Inclusive Economy series: Through three groundbreaking reports funded by Citi Community Development, Building the Inclusive Economy series sets out new, cutting-edge economic development models for city leaders and community development practitioners interested in embedding equity, community wealth, and sustainability into their local economic growth plan. This series, authored by The Democracy Collaborative, The Democracy at Work Institute, and Project Equity, lays out key tools and building blocks for equitable local economic growth where all residents are able to maximize opportunities, thereby expanding urban economies where all can meaningfully participate and benefit. To learn more about the series, visit www.CitiCommunityDevelopment.com. The Cooperative Growth Ecosystem Project: This paper is the fruit of a year-long project carried out by the Democracy at Work Institute and Project Equity in 2014 and 2015. Hilary Abell and Alison Lingane of Project Equity, Melissa Hoover and Tim Palmer of the Democracy at Work Institute, and consultant Tim Lohrentz comprised the team that developed the Cooperative Growth Ecosystem framework; piloted it as an analytical and strategy tool looking at five regions around the country; hosted a national convening, in coordination with Citi Community Development, to get feedback and provide space for regions to develop actions plans; and developed this paper to share with the field. Engagement with partners in the San Francisco Bay Area, New York City, Cincinnati, Madison, and Western North Carolina played a vital role in the process. Both the Democracy at Work Institute, through its Local Initiatives Program, and Project Equity are available to support regional groups in applying the ecosystem framework in their communities. Democracy at Work Institute and Project Equity: The Democracy at Work Institute works at the national level to expand the promise of worker ownership to communities most affected by economic and social inequality, and to ensure that future growth in the field is adequately supported and strategically directed. Project Equity, based in the San Francisco Bay Area, fosters economic resiliency in low-income communities by demonstrating and replicating strategies that increase worker ownership. Combined, the project team has many decades of on-the-ground experience supporting worker cooperatives and social ventures. LEAD AUTHORS: Hilary Abell, Co-founder, Project Equity Melissa Hoover, Executive Director, Democracy at Work Institute Acknowledgments: We are grateful to the regional ecosystem leaders who we interviewed and consulted throughout the project and the many colleagues who so generously reviewed drafts. Thank you also to Project Equity intern Samy Jana for her research support, to our copy editor Tom Berger, and to the Surdna Foundation for additional funding for this work. Published January 2016. © 2016 by Democracy at Work Institute and Project Equity. This work is licensed under the Creative Commons Noncommercial Attribution License: http://creativecommons.org/licenses/by-nc/3.0/deed.en_US Copyright 2016 © Democracy at Work Institute and Trust for Conservation Innovation, on behalf of its program, Project Equity. © Project Equity and © Trust for Conservation Innovation are used interchangeably in this publication. Layout and cover design by Kate Khatib/Owl Grammar Press. Interior graphics by Kris Drury/Tythe Design. project MADISON NEW YORK CITY SAN CINNCINATI FRANCISCO BAY AREA WESTERN NORTH CAROLINA The Cooperative Growth Ecosystem framework Executive Summary presents the recent wave A new approach to local economic development of worker cooperative has never been more urgent, as poverty development as a timely, concentrates and inequality rises in cities across the United States.1 A new approach has also high-potential strategy never been more possible. Faced with a widening for inclusive, place-based racial wealth gap, unprecedented displacement community economic of people of color from urban cores, and development. The Democracy deadlocked federal and state governments, cities at Work Institute and Project across the country are flexing their local muscle Equity developed this to solve big problems. They are innovating. They framework to engage diverse are prioritizing strong local economies. Various actors across the private, public and private sector actors are working together to maximize broad-based community public, nonprofit and financial benefit in real and sustainable ways. sectors in exploring how they can work together to catalyze worker co-op development Purpose that creates quality jobs and The Cooperative Growth Ecosystem framework wealth-building opportunities encourages diverse stakeholders in the field of for low- and moderate- community economic development to invest in income workers. inclusive economic development by fostering 1 cooperatively owned enterprises within a broader entrepreneurial "ecosystem." It encourages organizations investing in worker cooperative development to push their conception of “cooperative business development” beyond basic supports for shared entrepreneurship to more coordinated, high-investment incubation and conversion models. It reframes quality jobs as well-paid jobs with ownership opportunities and envisions an ecosystem that can be leveraged to support viable worker- owned enterprises. We started with the following questions: What are the key elements of an entrepreneurial develop and support those elements that are ecosystem that supports sustainable growth of most critical for scale? cooperative enterprises and their ability to create Are there common stages of development for a quality jobs and assets for low-wage workers? Cooperative Growth Ecosystem? How do different elements in an ecosystem In active ecosystems like the five we studied, how interact with each other to support pathways to can actors collaborate for next-stage growth? scale—whether through startups, acceleration, In communities where no worker cooperatives or conversion of conventional businesses to or co-op developers exist today, what is the best cooperative ownership? place to start? Who are the actors in an ecosystem and how can they leverage existing resources and culture to In other words, how can all the actors in a place work together strategically to turn the demand for worker cooperatives into the supply of what is needed to create them? Beginning to answer these questions—and using the answers to develop strategic action plans—will position those investing time, resources, and political capital in developing worker cooperatives for success. We believe that ecosystem thinking and well-informed collaboration can make the difference between creating a few worker cooperatives and building an ecosystem in which worker coops create good jobs and real wealth for large numbers of people who are today working poor, underemployed. The Cooperative Growth Ecosystem Framework The Cooperative Growth Ecosystem refers to a systemic understanding of what helps worker cooperatives thrive and reach a scale that has impact. The ecosystem includes actors—individuals, organizations and institutions—and elements that interact to support or inhibit scaled growth of worker cooperatives. Our framework is inspired and informed by five distinct entrepreneurial ecosystem frameworks from diverse entities: the Babson Entrepreneurship Ecosystem Project, the World Economic Forum, Monitor Group, PolicyLink, and Social Enterprise Greenhouse.2 Four high-level elements were common to all: financial capital, human capital, business supports, and attitudes and culture. In addition, each had elements related to policy, markets, and education. We include all of these and add elements that we see as critical to the growth and success of worker cooperatives that provide opportunities for low- to moderate-income workers. 2 The Cooperative Growth Ecosystem has eleven elements in all, in three major categories. Essential Elements are the building blocks WHAT ARE of cooperative businesses and the engines WORKER for growth; neither impact nor scale can be COOPERATIVES achieved without them. Important Elements accelerate growth and can be key drivers for ? scale initiatives. Environmental Elements legitimize and create demand for worker Worker cooperatives are values- cooperatives, but do not directly support driven businesses that put growth or scale. worker and community benefit at the core of their purpose. The ESSENTIAL ELEMENTS: BUILDING BLOCKS members of the cooperative are ∂ Member skills and capacity the people who work in it. These ∂ Financing typically small and medium- ∂ Technical assistance sized businesses can be found in ∂ Growth-oriented co-op developers every sector and industry, from engineering and manufacturing IMPORTANT ELEMENTS: ACCELERATORS to retail to service. Workers ∂ Business supports participate in the profits, ∂ Connections to market oversight, and, to varying ∂ Policy degrees, the management of the ∂ Advocacy partnerships organization, using democratic practices. Workers own the ENVIRONMENTAL ELEMENTS: LEGITIMIZERS majority of the equity in the ∂ Values-driven businesses business

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